While declining slightly from the heights of last year, retail sales growth in Canada continues to outpace most of the world, including the US, EU, and UK. According to the Colliers 2023 Retail Outlook report. Key highlights for the 2023 report include:
- Canadian Consumers have higher savings than pre-pandemic, which should help cushion the (declining) effects of inflation in 2023.
- Retail rents reached record highs for most enclosed centres in Q1 of 2023.
- Retail sales growth is strongest in areas of Canada with lower cost of living and significant migration from the rest of the country.
- Retail is increasingly dominated by private investors, who see upside in demographic trends, the lack of competition, or the value of land contained in retail assets.
The study has shown that retail sales growth in Canada is continuing to outperform much of the world despite higher inflation and the steady recession predictions that have dominated the business press for most of the year.
Even though retail sales have cooled slightly from last year when prices spiked due to low inventory and supply chain woos followed by a steady rise in interest rates, the Colliers 2023 Retail Outlook said consumers are still spending.
The Colliers report noted that Canadian retail sales increased 2.4 per cent in March compared with the same month a year earlier, and while most, a rise that outperformed most developed markets around the world. U.S. retail sales edged up only 1.6 per cent while dropping in the U.K., France and Germany, the report said.
Within Canada, retail sales have been strongest in regions with a lower cost of living, the report said with the least affordable regions seeing the smallest gains (or losses) in retail sales, while the most affordable regions saw growth. Sales paralleled new migration trends witnessed in Canada during Covid with the highest sales in provinces that recorded a significant influx of Canadians from other parts of the country. “The tremendous growth in Alberta and muted performance of Ontario reflects significant interprovincial migration, with a record high level of leavers from Ontario, and a record high level of arrivals in Alberta,” the report said.
While Covid lockdown drove sales in home improvement categories as well as sporting and consumer technology goods, demand for travel, hospitality and entertainment has been a key driver of recent sales, the Colliers report noted. “The appetite for experience is still very strong,” said Adam Jacobs, senior national director of research with Colliers Canada. “We were all locked down for years and there’s absolutely still record-high demand for bars, sports, entertainment, travel, hotel rooms and plane tickets.”
Colliers noted that retail rents have reached all-time highs based on renewed leasing demand, low vacancy rates and a lack of new inventory has driven up demand for existing and established shopping centres.
“There’s a lot of focus on some big store closures in Canada, but if we zoom out and look at the overall nationwide trends, those are positive” added Jacobs.
Every region’s consumer spending index increased from last month’s scores, the report said with Alberta leading growth with an increase of 4.3 points in its monthly average and the lowest increase is in Quebec, at 0.5 points.
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